atLaw
Thomas P. Harrison
617 226-3491
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Areas of Concentration
Business and Real Estate
Office
Writing recently in this column, my colleague John Hanify, referenced Robert Frost’s famous poem, The Road Not Taken, and reflected on the choice made by a traveler who encounters two roads diverged. Far less profoundly, Yogi Berra is reported to have said: “When you come to a fork in the road, take it.”
This edition of At Law is dedicated to the innumerable “forks in the road” business people typically confront in establishing and growing an enterprise. Yogi’s directive sounds random, because it is and it usually results in quixotic decisions that have troubling and lasting consequences. Nevertheless, decisions must be made, so, with this edition, we outline a series of questions, concerns and considerations thoughtful business planners and entrepreneurs should be considering when establishing an enterprise. To provide this primer, Bob Richards and John Samia have offered a survey of the considerations at play in deciding among structural alternatives. This very abbreviated survey is in no way a substitute for legal and tax advice applied to a particular set of circum-stances. Rather, it is intended to sensitize the reader to the range of options and elements that must be considered in making enterprise choices.
Our colleague, Kathy Cross, explains why Yogi’s advice will inevitable fail in the context of the most recently developed and popular enterprise structure, the limited liability company (LLC). Kathy offers good advice about developing operating agreements and provisions that contemplate disagreement, dissent or deadlock among business partners. Long-standing statutes that regulate the performance of the traditional corporation have proven to be inadequate in dealing with the practical consequences of deadlock or shareholder disagreement. The relatively new statutory mechanism regulating LLCs has even less to say about member disputes and dead-lock, but it allows members the flexibility to address these situations before they are encountered. Kathy’s point, which we have seen proven daily, is that enterprise founders need to think through with their counsel the less happy realities of business associations and plan for the possibility of death, disability, disagreement or deadlock. So, with this edition, we hope to give you some insight into the forks in the road that lay ahead in enterprise planning. We hope to encourage you to consider thoughtfully with counsel your entity options, the relative benefits of each and the need to plan for contingencies.
Attorneys in our Corporate and Real Estate Group regularly advise clients facing forks in the road, and endeavor to equip them with business counsel and legal advice necessary to make fully informed decisions. Our goal is to help our clients solve business problems and advance business opportunities. We collaborate with members of our Litigation Group, because instances of our litigators untangling intramural disputes among shareholders, members or partners are legion. The primary reason for such difficulties, in almost every case, is the absence of considered ground rules for managing enterprise disputes. Kathy identifies several of the options in her article and many others may become apparent from the circum-stances of a particular business. But if you follow Yogi’s advice when encountering the first fork in the road and simply “take it”, you may be needlessly crippling the enterprise as it matures and its ownership becomes more complex. In addition to the survey of entity formation options and practical advice about the pitfalls of LLCs, this edition includes an important introduction to our new Washington D. C. office. For many years, our corporate and litigation services have involved intellectual property issues. However, we have been unable in those two areas to serve clients that have special concerns about preserving through the patent process their intellectual property or vindicating through litigation their interests in patents. We can now. We are pleased to offer these important services with the assistance of our colleagues in D.C. and in this edition we are pleased to introduce each member of the DC office and welcome them warmly to H&K.
